Date Published: 10/11/10

Gold Rises To Record Closing Price

Gold futures rose to a record closing price on bets that the dollar will resume a slump, boosting demand for precious metals as an alternative investment. Silver extended a rally to the highest level since 1980.

The greenback traded close to a a 15-year low against the yen on speculation that the Federal Reserve will expand a stimulus program to bolster the economy. The dollar rebounded against the euro. Hedge funds and other large speculators hold the most-bullish position in gold futures in almost a year. The metal has climbed 24 percent this year.

“The bullish case for gold is still intact, and people will come in and buy on the dips,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “You’ve got the specter of more Fed easing and economic uncertainty to support the gold market.”

Gold futures for December delivery rose $9.10, or 0.7 percent, to settle at $1,354.40 an ounce at 1:37 p.m. on the Comex in New York. The intraday record is $1,366, set on Oct. 7.

The Fed has kept its benchmark interest rate at zero percent to 0.25 percent since December 2008 and bought Treasuries and mortgage-backed securities to revive the economy. Policy makers next meet on Nov. 3 to decide on another round of quantitative easing.

Macquarie Bank Ltd. forecast that gold and silver next year will trade 15 percent higher than forecast. Gold will average $1,265, and silver will climb to $19.50 an ounce, the bank said in a report.

Exchange-Traded Products

Demand for gold as a haven from slumping currencies boosted investment in exchange-traded products backed by the metal. Global holdings gained about 1.1 metric tons to 2,084.76 tons on Oct. 8, according to Bloomberg data from 10 providers after reaching a record 2,097.01 tons on Sept. 30.

The 14-day relative-strength index for gold futures has been above 70 since Sept. 22, a signal to some traders that prices are poised to fall.

“Gold is overbought and needs a correction before it can go higher,” Lesh of FuturePath said.

Silver futures for December delivery advanced 24.4 cents, or 1.1 percent, to $23.349. Earlier, the metal reached $23.675, the highest level since September 1980.

Platinum futures for January delivery fell $17.90, or 1 percent, to $1,690.80 an ounce on the New York Mercantile Exchange.